Veteran on-chain analyst Willy Woo says that Bitcoin (BTC) is on the edge of moving into a lengthy correction phase.

Woo tells his 1.2 million followers on the social media platform X that BTC has until Monday to avoid printing a bearish divergence on the weekly chart.

A bearish divergence happens when price makes higher highs, while an indicator like the relative strength index (RSI) makes lower highs, suggesting that an asset is losing bullish momentum.

Says Woo,

“Dear Mr Bitcoin, you have [until Monday] to rally or you’re gonna print a bearish divergence on weekly charts and then we will be bored for weeks and weeks.”

Using proprietary data from his Bitcoin analysis firm, the Bitcoin Vector, Woo says that BTC appears to be strong, but may be “equalizing” itself after rallying faster than usual in previous months.

“Our Bitcoin Vector framework remains strong despite the pullback.

What’s happening is technical resistance in the form of a bearish divergence playing out against strong fundamentals. Basically, BTC ran up faster than normal and is equalizing.”

While many traders are still betting on the traditional halving-based four-year cycles, Woo says BTC is becoming more linked to external macro forces, and that predictable, cyclical price patterns are now a thing of the past.

“BTC is global macro this cycle. Which means don’t necessarily bet on nicely manicured four-year cycles. BTC is transitioning.

Internal forces, the halvening, are getting weak, global liquidity powers BTC – hence BTC is becoming the canary in the coal mine for global macro moves.”

At time of writing, Bitcoin is trading at $104,737

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Veteran on-chain analyst Willy Woo is warning that Bitcoin (BTC) may have a market correction if one key event does not happen in the near term.

Woo tells his 1.2 million followers on the social media platform X that Bitcoin needs to print new all-time highs or the flagship crypto asset may flip bearish.

“If we don’t get further highs soon, BTC will be setting up for bearish divergences on longer range charts at a time when capital inflows have been weaker than normal with speculation running too hot. If that happens we will need to wear out another wave of profit taking.”

However, the analyst says that the Bitcoin Risk Signal, which gauges whether BTC is at risk of a major drawdown in price, is flashing bullish, and possibly setting the flagship crypto asset up to print new all-time highs this week.

“Still, the broader picture is bullish with the risk signal dropping. If buying follows through this week, $114,000 is next in line to liquidate shorts. But right now there’s an opening for a bearish pivot.”

Woo also points out a concerning trend that Bitcoin’s spent output profit ratio (SOPR), which tracks whether coins are being sold at a profit or loss, indicates investors are sitting on substantial profits, suggesting they may be inclined to sell at any sign of a downturn.

“Speculation is going nuts on BTC at a time when there’s plenty of investor profits to take (SOPR). Reminds me of ‘be fearful when others are greedy.’ A lot comes down to how much buying happens this week when US markets open after a long weekend.”

Lastly, Woo says that investors buying Bitcoin has slowed for the first time since its massive breakout to new all-time highs, suggesting the potential for a bearish reversal.

“Capital flows into the network was very flat the last three days. This is an unusual lull in buying on our run from $75,000 to $112,000.”

Bitcoin is trading for $107,948 at time of writing, down 1.1% in the last 24 hours.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney